Attributing their growth to the purchase of laminate maker Quick-Step and price increases across all product lines, Mohawk Industries announced first quarter net sales totaling $1,925,106,000, an increase of 29 percent over last year's first quarter.
Adjusted net earnings for the first quarter were $72,862,000 (4 percent above last year) or $1.07 diluted earnings per share (EPS), a 3 percent rise over last year. During the first quarter, a non-cash LIFO charge impacted earnings by $14 million ($8.7 million, net of tax) or $.13 EPS compared to $6 million ($4 million, net of tax) or $.06 EPS in the first quarter of last year. In accordance with U.S. Generally Accepted Accounting Principles (GAAP), net earnings for the first quarter were $71,120,000 and EPS were $1.04 per share. Last year's first quarter net earnings were $70,020,000 or $1.03 in EPS.
The Mohawk segment showed net sales of $1,150,546,000 in the first quarter, up 5 percent from $1,091,346,000. This was primarily attributable to increases in prices in all product lines as well as growth in hard surface sales. The Dal-Tile segment posted net sales of $473,910,000 in the first quarter, an 18 percent jump from $401,876,000, and attributable to internal growth and an improved product mix. Unilin (Quick-Step) segment net sales were $302,630,000.
Jeffrey S. Lorberbaum, Mohawk's chairman and CEO, said, "The results for the quarter were in line with our guidance that we revised earlier. The revision was attributable to our Mohawk segment which was negatively impacted by a $14 million non-cash LIFO charge as well as lower sales growth and margins in the residential replacement carpet category. The slower carpet industry sales also impacted pricing on some opening price point products more than we anticipated. Our material costs moderated slightly from the high levels after the hurricanes and remained relatively stable through the quarter.
"Our balance sheet continues to strengthen as the debt to capitalization ratio was further reduced to 51%. Our inventory turnover also improved to 4.8 times from 3.9 times the prior year. We will continue to focus on debt reduction in the future.
"The strong economy along with improving consumer confidence should positively affect our business in future periods. We continue to anticipate continued growth in commercial and an improvement in the replacement category, which is our largest channel, with some slowing of new residential construction business later this year. The recent change in oil prices has not presently impacted our raw materials. We cannot predict the affect on our costs or customer demand in the future. After considering these factors, we estimate the earnings forecast for the second quarter of 2006 to range from $1.51 to $1.60."